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CSR Strategies Reap Financial Rewards

From Environmental Leader , Published 14 January 2014

Companies that introduce a sustainability strategy throughout their supply chain generally see a boost in their financial performance — but those that don’t fully commit to the strategy generally see a decline in revenue, according to a study by Clark University researchers.

Investigating the Relationship of Sustainable Supply Chain Management with Corporate Financial Performance , by Zhihong Wang and Joseph Sarkis, tracked 411 companies from Newsweek’s green ranking of the top 500 companies.

The study found that those firms that integrated sustainable  supply chain  management, jointly including social and environmental supply chain management, generally saw  “marked upgrades” in their fiscal returns , particularly through 2011, reports Strategy and Business. However, to see the improvements companies must be patient as the positive effects can have a time lag of at least two years, the study said.

The study also found that companies that only implemented half of a strategy did not reap financial rewards. In particular, those that implemented just an environmental strategy and no social responsibility strategy found that any installation costs outweighed financial  gains.

The authors theorize that the reason for this finding could be that the incremental cost of implementing these two programs may be less, on average, than an individual program, while accruing the full benefits of both programs.

Companies that  close the gap between consumer expectations and perceptions  of their corporate social responsibility work can positively transform their brand,Craig Bida, executive vice president of cause branding and nonprofit marketing for Cone Communications, said earlier this month.

Cone Communications research found 93 percent of  US  consumers expect companies to do more than just make money, but only 16 percent believe these companies have actually made a positive impact. Bida recommends to that to effectively close the CSR gap, management must first embrace consumer skepticism.

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